Why Policy Dictates the Economic Outlook

Why Policy Dictates the Economic Outlook

17:52 12 February in Blog

Why Policy Dictates the Economic OutlookLast year, small businesses made capital investment decisions over “whether an expiring tax provision, Sec. 179—which allowed for $500,000 of accelerated depreciation for equipment purchases—would be continued, or whether a scaled-down version with a much lower threshold of $25,000 would take its place,” according to The Wall Street Journal.

In December, Congress reinstated the larger Sec. 179 deduction for 2014, meaning that small businesses were pushed to make decisions surrounding equipment purchases before knowing what the tax provision stated. On the first of January, the deduction dropped back to $25,000.

Such temporary tax and budgetary policy making creates roadblocks for consumers and business to plan and invest in the future.   Comprehensive tax reform and annual federal budgets are a necessity for businesses to plan their capital investment and capital expenditures budgets.  Inevitably, legislation creates economic ambiguity. In order to improve the economic outlook, more stable laws are vital.

Capstone Capital Group, LLC helps clients build sturdy outlooks for their economic future by providing robust services. For years, we have helped organizations get the immediate cash they needed without the typical red tape that most banks require. For more information about our business funding solutions, Single Invoice Factoring, give us a call today at (212) 755-3636 and speak to a representative.

Spring Brings ‘Spec’ Homes

Spring Brings ‘Spec’ Homes

21:54 03 February in Blog

Though winter is still upon us, builders are betting on a strong spring with speculative, or ‘spec’ homes. The construction of such homes is already underway with home builders getting a head start. Speculative homes are homes built without a buyer in place. The advantage of ‘spec’ homes to home builders is the assumption that the wind carrying recent sales will blow into the home purchasing season of spring.

Spring Brings ‘Spec’ Homes

Going into 2015, over 200,000 homes under construction or recently completed were listed for sale by home builders, according to the data released by the Commerce Department. This number is a 17.2% increase from 2014, signifying optimism amongst builders for spring home sales. Since June 2008, the sales of new homes this past December were the highest they’ve been.

With the Super Bowl marking an end to football season and a start to the spring home selling season, builders are prepping ‘spec’ homes for sale. As traction around selling speculation homes grows around March and April, more communities will be opened by builders for a promising spring home selling seasons.

Capstone Capital Group, LLC. Understands the importance of the spring home selling season and the growth it means for the home building industry. For years, we have helped organizations get the immediate cash they needed without the typical red tape that most banks require. For more information about Capstone and our Single Invoice Factoring, purchase order factoring give us a call today at (212) 755-3636 and speak to a representative.

Happy Holidays from Capstone!

21:29 22 December in Blog

Untitled2At Capstone, the holidays are a time for us to reflect on the past year and look to the future. 2014 has been a milestone year for us for all that has been strived for and attained. We achieve what we seek and couldn’t be happier about the growth and success we have seen. We hope you all had a prosperous 2014 as well and cheers to the New Year!

Capstone wouldn’t be a leader in innovative financial solutions if it weren’t for your continued loyalty. And it is in this spirit that we want to thank you, sincerely and truly for your support.

Capstone will be closed on December 24th, 25th, 26th and 31st as well as January 1st in order to ring in the holiday and the New Year with our beloved family and friends.

We wish you a happy holiday and look forward to the start of a healthy New Year!

Interest Rates on the Rise

16:52 15 December in Blog

UntitledThis week, the Federal Reserve indicated that interest rates will be raised next year. In a statement issued from the policy meeting, the Federal Reserve said monetary policy will be “normalized.”

Since 2008, rates have hovered near zero, with the Federal Reserve offering consistent assurances that rates would remain near zero to contend the economy’s low inflation and high unemployment rate. The proposed normalization won’t happen overnight. Even with increased rates, the flow of the economy will still be considered, with rates beginning to rise mid-2015.

But, not everyone is in agreement. According to The Wall Street Journal, “Dallas Fed President Richard Fisher said rate increases might need to come sooner than the Fed plans. Minneapolis Fed President Narayana Kocherlakota said the Fed isn’t putting enough weight on the risks of low inflation. And Philadelphia Fed President Charles Plosser wants the Fed to stop giving time-linked guidance about its rate plans.”

Rates are predicted at anywhere from 0.375% to 4% by the end of 2016, with no solid figure agreed upon. All except two policy makers noted that they predicted an increase of short-term interest rates in 2015. Their median estimate put short-term borrowing rates at 1.125% in the next year. For 2016, the median rate estimate was 2.5% and for 3.625% for 2017. Of course, this is all gradual and dependent on the growth of the economy.

While the labor market has improved, with a lower unemployment rate, inflation could alter plans. The Labor Department reported recently that consumer prices dropped 0.3% in November. This is marked as the largest one-month drop since the massive financial crisis in 2008. Federal officials have confidence that this drop, as well as the recent oil declines, won’t completely hinder their efforts. Inflation developments will be watched carefully, and we’ll monitor developments from the next policy meeting to take place January 27-28.

Capstone Capital Group, LLC. understands the importance of these policy meetings and what higher interest rates mean for you. Capstone offers Single Invoice Factoring (“Spot Factoring”) as a solution.   For years, we have helped organizations get the immediate cash they needed without the typical red tape that most banks require. For more information about Capstone and our Single Invoice Factoring and purchase order factoring give us a call today at (212) 755-3636 and speak to a representative.

Sustaining Homeownership in an Unsustainable Economy

22:05 12 December in Blog
Recent data suggests that significant roadblocks could arise in the near future that would challenge those wishing to become homeowners.  The data collected was made public under the Home Mortgage Disclosure Act (HMDA). From this information, we can gather that African American homebuyers represent 4.8% of the total home purchase loans from 2013.
 
For conventional loans, African Americans were denied at levels that ranged from 25.5% to 56%, according to the HMDA data from 2013. Projections assume there could be as many as 17 million new U.S. households leading up to the year 2025. Potentially, 13 million of the 17 million new households could be owned by minority families. So, what does this mean for the future of our economy?
 
During the foreclosure crisis, African American home-purchase loan trends have seen a significant decrease, falling from 8.7% in 2006 to 4.8% in 2013. In contrast to the increase there has been with Caucasian home-purchase loan activity (rising from 61.2% in 2006 to 70.2% in 2013); these figures are staggering.
 
More than 70% of mortgage loans were made to African American homeowners last year, and 63% were made to Hispanic homeowners. We want to tell you what can be done. There are a variety of tools and policies at your disposal that are proven to extend sustainable homeownership to racial minority homeowners. The 97% loan-to-value (LTV) mortgage is one tool that you might have seen featured on Freddie Mac. The rate for this type of loan is extremely similar to that of loans with down payments as high as 10%. Federal Housing Finance Agency Director Mel Watt declared that the government conservator of Fannie Mae and Freddie will consider reinstating the purchase of LTV loans by the two government-sponsored enterprises. Alternative credit scoring models are also under consideration.
 
Accessible home-purchase loan options should be just that, accessible. Minority families need accommodation at the national level so they can maintain job growth and sustain their homes. Capstone Capital Group, LLC understands the difficulty facing homeowners of color and we stand with you in fighting for the tools and policies that are necessary for sustainable home ownership. For more information about Capstone invoice factoring, commercial and business funding solutions, give us a call today at (212) 755-3636 and speak to a representative.

Manufacturing Still Matters in the U.S.

00:29 06 December in Blog
Manufacturing is an important facet of the U.S. economy, despite the increase in imported goods steady elimination of factory jobs here in the states. With private sector manufacturing jobs representing only 10% of the workforce now versus 25% during the 1980s, it would seem the private sector wouldn’t provide much stamina.  However, this disregards those who rely on manufacturing, such as truck drivers and forklift operators. 
 
The yardstick that measures the robustness of manufacturing includes the following indicators:
  •  Final sales of U.S. made goods
  •  Ultimate price garnered by domestically produced goods (this accounts for approximately one-third of gross domestic product)

GDP tends to be most influenced by the goods sector, which includes areas like mining that causes fluctuation of the GDP based on whether times are good or bad.

 
The news appears to be good for U.S. manufacturers.  The institute for Supply Management’s index saw a jump in manufacturing in the month of October to 59 from 56.6 in September. This places manufacturing above 50, matching its three-year high. 
 
While financial information provided by Markit shows manufacturing’s gains easing up, the Federal Reserve Bank of New York and Philadelphia shows an uptick in activity.  Additionally, estimates by economists show increases in the last quarter of 2014.  Clearly manufacturing in the U.S. appears to be holding strong, at least for a while.
 
Thanks to a sharp decline in oil, costs of products will decrease, and a stronger dollar will make products less competitive globally.   Further, the fall in oil prices will likewise bolster the cost of good production here in the U.S.
 
Additionally, the increase in factory activity may reflect a healthier stage in the economy as hiring goes up allowing for more consumer spending. This would also encourage companies to step up production in turn necessitating additional hiring.  The good news in manufacturing could spell a very promising 2015. 
 
While manufacturing here in the U.S. seems to be picking up speed, there are still many small to mid-sized business out there in need of additional working capital to make payroll or expand operations.  Capstone Capital Group, LLC understands the difficulty of obtaining traditional business financing and accordingly offers Single Invoice Factoring (“Spot Factoring”) as a solution.   For years, we have helped organizations get the immediate cash they needed without the typical red tape that most banks require.  For more information about Capstone and our Single Invoice and Purchase order Factoring, give us a call today at (212) 755-3636 and speak to a representative.

Bye-Bye, Branches-Branch Closures Signal Big Changes in Banking Services

15:23 26 November in Blog
As banking continues to go through changes and services become more electronic-based, bank branches are slowly falling off the map. Just under 2,600 bank branches have closed in 2014, while a mere 1,137 have opened. SNL Financial reported that 2013 saw a net loss of 1,487 branches while 2014 has seen a loss of 1,462 so far. In total, there are 94,752 branches in the US, leveling out to an overall 1.5% decline.
 
Acquisitions, mergers, e-banking services, regulation and many other factors have contributed to the slow decline of brick and mortar branches.
 
The following top five banks that have seen closures this past year:
 
·         Bank of America (148 closures)
·         SunTrust (60)
·         BNP Paribas (47)
·         KeyCorp (45)
·         JP Morgan Chase (40)
 
It’s clearly noticeable that Bank of America has seen the highest number of brick and mortar branch closings. In the 3rd quarter alone, the company saw 41 closings. Bank of America is currently the second largest bank determined by deposits. It ranks third for branch numbers in the US. As of June 30, 2014, this number was 5,099.
 
As closures continue to sprout up across the board in virtually all areas of the US, many fear that the impact on neighborhoods and communities will be a significant one. The National Community Reinvestment Coalition stated in a report the “vibrancy of communities” relies heavily on the “critical services” that bank branches provide. The group noted that predatory lenders are just one of the many problems that arise in areas where bank branches close their doors.
 
Others believe that bank branch closings will only see a temporary decline. Banking analysts are confident that things will smooth over once the yield curve begins to expand, and the Federal Reserve regulates interest rate policy.
 
In terms of regional closings, SNL Financial reported that Chicago has seen the largest hit with 125 losses. Washington, D.C., saw the second most amount of closings, ranking in at 39.
Illinois, in terms of state closings, saw the largest loss. Ranked behind Illinois were Pennsylvania with 92 losses, Ohio (84), Michigan (75), and New York (70). In fact, only six states reported positive gains in the past year. Nebraska saw the most openings which totaled to nine.
 
While most banking services can be conducted online, there are still some things that community bank branches do which serve a purpose. Regardless of technology and mergers rendering a select few branches useless, the rest will continue to thrive and serve communities.
 
The banking industry has gone through many changes these past few years and continues to do so.  Services that banks used to offer have changed significantly and have even been eliminated altogether.  With regulators imposing ever stricter rules on credit, businesses are finding it more and more difficult to obtain loans they truly need.  Capstone Capital Group, LLC has the answer.  Capstone has eliminated the bank red tape by offering small to mid-sized business Single Invoice Factoring (“Spot Factoring”).   Businesses can now get the immediate cash they need in exchange for working capital from Capstone Capital Group.  For more information on Capstone’s Single Invoice Factoring call us today at (212) 755-3636.  

Here Comes the Surcharge: Big Banks Dealt another Regulatory Blow by the Feds

21:09 20 November in Blog
Here Comes the Surcharge: Big Banks Dealt another Regulatory Blow by the Feds
In another effort to reduce the risk of “too big to fail” banks and financial institutions, the Federal Reserve plans to hit the largest of U.S. banks with an expensive new regulation.  Accordingly, Federal regulators intend to impose a surcharge on the largest U.S. banks requiring them to maintain a fatter cushion in order to protect them from potential losses. The version of the surcharge proposed by the Feds will be tougher than the one international regulators agreed to. 
Additionally, when determining the size of the new capital surcharge, the Fed will penalize those banks that heavily rely on volatile forms of short term fund, such as overnight loans.  By implementing these measures, some of the larger U.S. banks may need to increase their capital cushions beyond those of their international rivals.  The move has led some to wonder if Washington is putting U.S. banks at a competitive disadvantage.  The exact amount of capital needed by big banks has yet to be determined.
Banks have added substantial capital since the financial crisis and, at present, are currently subject to many new regulations. The exact range for their capital surcharge hasn’t been settled on by the Fed.  However, they are considering a range that extends a few percentage points higher than the top range of 2.5% of risk-weighted assets imposed by international regulators.  It’s quite possible U.S. banks could face surcharges as high as 4.5%.
According to regulators, by raising the capital requirement amounts for firms that pose the greatest risk to the U.S. financial stability, the Fed intends to improve these firm’s resiliency.  What is at issue is the requirement that the world’s largest financial institutions hold an additional layer of padding in case of another financial crisis.  While the details of the Fed’s proposal on specific banks are not yet clear, firms with large broker-dealer operations, like Goldman Sachs Group, could potentially face increased capital charges under the Fed’s plan.  This is because such firms rely on large short-term loans to finance client activities.
Firms like Goldman Sachs and Morgan Stanley count such short-term liabilities as more than one-third of their liabilities. Both firms have indicated in regulatory filings that they are maintaining enough capital to meet international surcharge requirements.  The U.S.’ plan to enact a higher surcharge shows the latest move by Washington to boost the banking system by requiring Wall Street to protect themselves against losses. As a bonus, regulators adopted additional rules requiring banks to hold safe assets that they can sell for cash if they need to. 
It is not clear how many U.S. firms will be required to raise additional capital to comply with the United States’ tougher surcharge requirements, and some of the larger banks declined to comment. However, it is clear that larger U.S. banks will argue the surcharge is putting them at a competitive disadvantage. 
As the Feds continue to further regulate the banking industry, loans to small and midsized businesses become increasingly more difficult to obtain.   Capstone Capital Group, LLC can assist you.  We have been assisting small to mid-sized businesses in obtaining the required working capital they need to grow and thrive, and have been doing it for many years.
Capstone specializes in Single Invoice Factoring (“Spot Factoring”) for businesses in need of immediate cash. For more information about our Spot Factoring product and how we can help your business grow, contact us today at (212) 755-3636, or visit our website at www.capstonetrade.com.
 

The Fed’s Answer to U.S. Economic Growth: Let Them Have Loans-With Little to No Risk

15:27 17 November in Blog
In a recent move by Washington to stunt economic growth, Washington agreed to a two-step strategy.  The first step involves Fannie Mae bringing back low and no money down mortgages. The second step would be to discourage business loans.
 
A few weeks ago, Mel Watts, the Director of the Federal Housing Finance Agency, discussed plans to bring back low down payment options for government backed mortgage loans.  In some cases, allowing down payments as low as 3%.  Mr. Watts also suggested other initiatives to expand credit that critics fear may lead to another real estate boom and bust scenario. 
 
Additionally, the banking regulators and the Federal Reserve just approved new rules for “private” mortgage-backed securities.  The proposal wouldn’t require underlying loans to have any down payment at all.  In an ironic twist, the 2010 Dodd-Frank law was enacted to ensure that everyone has “skin in the game”.  However, with the new rules enacted by regulators, it would seem no one is required to have any skin in the game.  The new rules will allow borrowers to put no money down and will also allow them to have high debt-to-income ratios – as high as 43%. 
 
The new rules will allow creators of mortgage-backed securities to bundle pools of the above-mentioned loans and sell them on the secondary market without having any risk of credit.  Without any reform, investors would be duped into believing the risk isretained by the mortgage bond sellers and that these mortgages are safe.
 
In yet another part of the new rules, regulators forced risk retention for so-called leveraged loans.  These loans are made by banks to heavily indebted companies.  They do carry the risk which does not disappear when loans are bundled together. These bundled loans are what is termed collateralized loan obligations (CLO). What is even more surprising is that with these loans regulators mandated a 5% credit risk retention on the buyers of these loan pools.
 
While leveraged loans didn’t have anything to do with the financial crisis, the Fed’s reasoning for discouraging risky business loans is twofold.  Along with the Fed’s campaign justifying “risk retention”, the new regulations may offset distortions in the credit market from experiments in monetary policy engaged in by the Feds. 
 
Nevertheless, some experts believe the solution to all this would be to start raising rates for everyone, and not just certain classes of assets.  Another thing would be for judges to make certain provisions of Dodd-Frank are not applied o CLO managers in ways not intended by Congress.
 
The above should give the new congress something to think about, and the incentive to re-write certain provisions of Dodd-Frank, beginning with the repeal of the provisions regarding “risk retention”.
 
As regulators continue to enact rules making business loans more difficult to obtain, Capstone Capital Group, LLC has the solution. Capstone has been assisting small to mid-sized businesses for years.  They can help your business obtain the necessary working capital you need to help sustain and grow during uncertain economic times.  This is accomplished without all the red tape you would normally get from most banks.  Capstone specializes in Purchase order factoringSingle Invoice Factoring (“Spot Factoring”) and is geared towards firms in need of immediate cash. Spot Factoring is an alternative to business financing in that it provides no contract invoice selling, with flexible terms, in exchange for working capital from Capstone Capital Group.  Give Capstone Capital Group a call today at (212) 755-3636 to find out how we can help your business grow and succeed.

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